Headlines
- The UK government has announced that the Financial Conduct Authority (FCA) will assume sole responsibility for supervising anti-money laundering (AML) and counter-terrorist financing (CTF) for legal, accountancy and trust and company service providers currently supervised by multiple bodies (including the Solicitors Regulation Authority (SRA) and HMRC).
- The current system involves multiple supervisors (statutory and professional bodies), and the reform is intended to simplify oversight, strengthen enforcement and improve consistency.
- Firms in the affected sectors will ultimately shift from being supervised by a Professional Body Supervisors (or another relevant statutory supervisor) to being supervised by the FCA for their AML/CTF obligations.
- This shift may lead to new supervisory expectations and reporting frameworks.
- Detailed implementation parameters (such as transitional arrangements, funding, scope of responsibilities and timing) remain to be published, likely in 2026, following a Treasury consultation in November 2025.
Current supervisory regime for AML/CTF in the UK
Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the “Regulations”), the UK’s AML/CTF regime currently consists of three statutory supervisors (the FCA, HMRC and the Gambling Commission), and 22 Professional Body Supervisors (overseeing legal and accountancy firms):
- Supervisors register firms, monitor compliance (i.e., through desk-based reviews or onsite visits), enforce failures and support sector-specific guidance.
- Firms in scope must comply with customer due diligence, ongoing monitoring, suspicious activity reporting, risk-assessments and internal controls in line with the Regulations.
In practical terms, while professional service firms are subject to the Regulations and relevant AML/CTF obligations, supervision is conducted via the Professional Body Supervisors to which they are affiliated, and the tri-partite statutory supervisors engage only in specified sectors.
Proposed reform
On 21 October 2025, the UK government responded to the Treasury’s 2023 Consultation on reforms to the current AML/CTF supervisory regime, aimed at tackling “continued weakness in supervision”. Taking into consideration the stakeholders’ responses to the 2023 Consultation, the government has selected a model under which the FCA will become the single professional-services supervisor for AML/CTF in respect of legal, accountancy and trust and company service providers.
However, details of a transition plan, enabling legislation or funding arrangements that are required before the FCA can assume full responsibility remain outstanding. It is currently unclear as to how such reforms will operate in practice, though firms can expect further clarity from November 2025, when the Treasury will publish a further consultation on the powers that the supervisor should have.[1]
In terms of next steps, firms will need to monitor emerging guidance (such as from the FCA, professional bodies, or the Treasury) to ensure continuity of compliance and avoid supervisory gaps.
What does this mean for firms?
Firms in these sectors should anticipate:
- A potentially different supervisory framework (FCA-style supervision) including new reporting templates and potentially higher expectations of governance, oversight, and controls. There may also be a loss of sector-specific nuance; Professional Body Supervisors bring sector knowledge, and the shift to the FCA may require firms to adapt to a less specialised approach.
- Closer alignment of AML/CTF supervision with a broader FCA regulatory approach (i.e., a risk-based, market-integrity focus). Enhanced supervision by a single body may lead to higher expectations of firms, increasing compliance costs and supervisory burden.
- Transitional risk; until the transition is complete, firms might need to respond to both old and new supervisors, creating complexity.
[1] AML_Supervision_Reform_Response_Document_FINAL.pdf.